Japan and India are in discussions to settle trade directly in yen and rupees, according to Nikkei. The move would allow the two countries to sidestep the US dollar in bilateral transactions, joining a growing list of nations quietly building plumbing around the world’s reserve currency.
Bilateral trade between Japan and India hit $27.47 billion in FY 2025-26, with Japan shipping $21.43 billion worth of goods to India alone.
What direct settlements actually mean
Right now, if a Japanese automaker sells parts to an Indian manufacturer, both sides typically convert through the US dollar first. The Japanese company converts yen to dollars, the Indian company converts dollars to rupees. Two conversions, two sets of fees, two exposures to dollar volatility.
Direct yen-rupee settlements would eliminate that middleman. Businesses on both sides would transact in their own currencies, reducing conversion costs and shielding themselves from swings in the greenback.
